Trade Practices Commission v. J.W. Bryant Pty Ltd & Ors [1978] FCA 45

CATCHWORDS

Trade Practices - Conduct in restraint of trade - Injunction -

Pecuniary penalties.

Trade Practices Act 1974, ss.45, 76, 77 and 80

TRADE PRACTICES COMMISSION v. J. W. BRYANT PTY. LIMITFD & ORS.

Coram : Franki J. 23 June 1978

Sydney

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-RAZE_DE ORDER : 23 June 1978 4. Each defendant be restrained from giving effect to * or understanding alleged in paragraphs 19 and 25 of the statement of clain.

2. ¥ach defendant be restrained from making a contract or arrangement or from entering into an understanding between itself and any other farm produce agent or agents where guch contract arrangement or understanding contains &@ provision in or to the effect of that alleged in paragraphs 19 and 23 of the Statement of Claim or from giving effect to any such provision.

3. Each defendant be restrained from making a contract

or arrangenent or from entering into an understanding

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petween itself and any other farm produce agent or agents where such contract arrangement or understanding contains a provision which has

. the purpose or haa or is likely to have the

effect of fixing controlling or maintaining or providing for the fixing controlling or maintaining of, the price for, or a discount, allowance, rebate or credit in relation to services supplied or to be supplied to growers of farm produce by the defendant or any other farm produce agent or agents or from giving effect t6 any such provision.

The defendants pay the plaintiff's costs of these proceedings.

Each defendant pay a pecuniary penalty of $2500 to The Commonwealth.

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IN THE FEDERAL COURT OF AUSTRALTA

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NEW SOUTH WALES DISTRICT REGISTRY No. G41 of 1977 GENERAL DIVISION

BETWEEN : TRADE PRACTICES COMMISSION AND : J. W. BRYANT PTY. LIMITED AND ORS. REASONS FOR JUDGMENT: FRANKT J.

DELIVERED: 23 June 1978

On 24 June 1977 the Trade Practices Commission commenced proceedings by way of statement of claim against the eight defendants alleging a breach of s.45 of the Trade Practices Act, 1974 ("the Act") and claiming a pecuniary penalty, an injunction and costs.

The matter ultimately proceeded on the basis of a statement of agreed facts signed by counsel together with three affidavits filed on behalf of the defendants. Some weeks prior to the hearing the defendants offered undertakings in relation to future conduct. At all relevant times each defendant has been a trading corporation carrying on business as a farm produce agent from premises situated at the Sydney markets, which were formerly at Haymarket, and are now located at Flemington. Each defendant at all relevant times was a member of an unincorporated association known as The New South Wales Chamber of Fruit and Vegetables Industries ("the Chamber"). This association was, inter alia, an assqciation of farm, orchard or garden produce

agents, merchants or distributors.

-2- Paragraph 19 of the statement of claim alleged : "On or about 8 July 1975 the defendants and each of them and other members of the Chamber made an arrangement whereby they agreed that members of the Chamber would thereafter levy farm produce growers with charges for the sorting and stacking of farm produce (hereinafter called 'porterage charges') in respect of farm produce delivered to the Syduey Markets in the said State." It was further alleged that the arrangement was in restraint of trade or commerce, that each of the defendants gave effect to the said arrangement by levying farm produce growers with porterage charges 1n respect of farm produce delivered to the Sydney markets and that in or about August 1975 each defendant gave effect to the alleged arrangement by requesting those members of the Chamber that were not levying farm produce growers with porterage charges in respect of farm produce delivered to the Sydney markets to resign their membership of the Chamber. Similar allegations were pleaded in respect of a similar alleged understanding of the same date. Defences were filed by all defendants in April 1978. In the meantime the Trade Practices Act had been significantly amended by amendments which took effect from 1 July 1977 but it was not argued that this affected the position. The only matters which were argued before me were whether any penalties

should be imposed under ss.76 and 77 of the Act and if so of

what amount, and whether the relief to which the defendants

agreed the plaintiff was entitled should be by way of injunction

or undertakings in the same terms.

The case proceeded upon the basis that it was conceded

by the defendants that they had contravened s.45 of the Act.

Affidavits were filed by three members of the Council of the Chamber seeking to explain the events. No cross- examination took place on these affidavits and each deponent swore that in February 1974 members of the Chamber met the then New South Wales Minister for Agriculture seeking an increase in the rate of commission provided for farm produce agents under the Farm Produce Agents Act, 1926 (N.S.W.). The evidence was that the Minister there informed the members of the Chamber who attended him that they should exhaust all avenues available to them under that Act to collect costs from growers before he would consider recommending a rise in commission and that in his view porterage charges paid by agents to outside organisations for receiving, sorting and stacking produce which arrived at the markets outside the hours of an agent's staff, were "out of pocket expenses"

properly payable by the "principal" within s.15 of the Farm

Produce Agents Act, 1926 (N.S.W.). It was said by the deponents that an extraordinary general meeting of the members of the Chamber was called for 8 July 1975 "...to infirm the members of the Minister's view". That meeting agreed by a majority to levy growers with porterage charges. The Council of the Chamber on the same day composed two draft letters

for consideration by the Chamber's solicitors, one for inter- state growers and the other for New South Wales growers to

be sent by members of the Chamber to growers on whose behalf they acted. According to the minutes of this meeting the letters "...were to be looked at by the Chamber solicitor

so that they would in no way contravene the Act". It is clear that the Act there referred to was the Farm Produce

Agents Act, 1926 (N.S.W.). It was put by counsel for the

defendants that the contravention of the Trade Practices Act

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had arisen out of the focusing of attention on the State Act. He submitted that everybody was concerned with problems under the State Act and in effect that attention was not given to the Trade Practices Act.

When the interview with the Minister took place in February 1974 the Trade Practices Act under which these proceedings are brought had not been passed as it was assented to on 24 August 1974 and did not come into operation

until 1 October 1974. One might have thought that by 8

July 1975 sufficient would have been known of the Trade Practices

Act by members of the Council of the Chamber for some consider-— ation to have been given to 1t. On 8 July 1975 a director of each of the first six defendants was a member of the Council and a director of each of the defendants attended the meeting of 8 July 1975 and voted in favour of the relevant resolution. Subsequently, a memorandum dated 30 July 1975 was forwarded by the President of the Chamber to each of 1ts members, and in part, it reminded them that the deduction of the amount paid to porterage companies for sorting and stacking should take effect as from 1 August 1975 if that was not already being done.

Four members were asked to attend a meeting of the Council of the Chamber held on 12 August 1975 to explain why they were not deducting the charges for sorting and stacking. Let ters dated 22 August 1975 were sent by the President of the Chamber to five members, including the

four previously mentioned, in the following terms :;

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"It is with deep regret that Council has to ask you to tender your resignation from The N.S.W. Chamber of Fruit and Vegetables Industries under Rule 8(b) within fourteen (14) days of receipt of this letter",

On 22 April 1976 an extraordinary general meeting of the Chamber resolved to refrain from any blanket porterage charge and to only levy pa terage charges that were actually paid to contractors in respect of both New South Wales and interstate produce arriving out of market hours.

In December 1976 the Commission was advised by the President of the Chamber by letter dated 14 December 1976 that on 29 July 1976 an extraordinary general meeting of members of the Chamber, inter alia, had rescinded the Chamber's resolution of 8 July 1975, in respect of porterage charges. No member of the Chamber to whom the letter of 22 August 1975 was sent was expelled from the Chamber nor did any such member resign.

The President of the Chamber sought to explain relevant events in the letter of 14 December 1976, which appears to have been sent in response to a notice under s.155 of the Trade Practices Act. The letter alleges, inter alia, that the resolution of 8 July 1975 "...was never intended to be mre than an acknowledgement by each of them arrived at through independent conclusion, that economic circumstances then warranted their passing porterage charges on to growers and that the seemingly conscious parallel behaviour by members in relation to this matter was fully explainable by ordinary commercial considerations and not as a result of acting to

a common plan". I find it difficult to accept this explanation

and in any event no argument is presented to me that what took

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place was not an agreement or arrangement within s.45 of the Trade Practices Act. The letter, however, continued, "If there has been an infringement of the Act, it arose out of the Chamber's naivety and failure to adequately acquaint itself with the implications of the Trade Practices legislation". An assurance was also given in the letter that the Chamber was then doing all it could to educate its members as to the operation of the Trade Practices Act and that it would strive to ensure in so far as 1t was able that the activities of its members did not infringe or attempt to circumvent the provisions of the legislation.

Section 76(1) of the Act provides that if the Court is satisfied that a person, inter alia, has contravened a provision of Part IV of the Act :

",..the Court may order the person to pay to the Commonwealth such pecuniary penalty (not exceeding $50,000 in the case of a person not being a body corporate, or $250,000 in the case of a body corporate, in respect of each act or omission by the person to which this section applies) as the Court determines to be appropriate having regard to all relevant matters in- cluding the nature and extent of the

act or omission and of any loss or damage suffered as a result of the act or omission,the circumstances in which the act or omission took place and whether the person has previously been found by the Court in proceedings under this Part to have engaged in any similar conduct,"

It was common ground that no defendant had previously been involved in proceedings before the Court in relation to the Act. It was alleged on behalf of the defendants that no loss or damage had been suffered as a result of any relevant act or omission, but I am not satisfied that, at least in some cases, the resolution of 8 July 1975 may not have had the

effect of causing growers to pay porterage charges which othcr-

wise might have been absorbed by an agent. I proceed upon the

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basis, which is not disputed, that the resolution of 8 July

1975 constituted an arrangement or understanding contrary

to s.45 of the Act and that in an undetermined number of

cases that arrangement was given effect to by the levying

of porterage charges. No argument was presented to me

concerning the scope of the words "act or omission" in

s.76(1).

For reasons set out in my judgment of 8 June 1978

in Trade Practices Commission v. Milreis Pty. Limited I do

not consider, bearing in mind the limited nature of the

matters for my determination, that there is any need for amendment to the pleadings due to the Act being amended in

1977. The plaintirf seeks injunctions against each defendant

in the following terms :

1. An injunction restraining the defendant from giving effect to the arrangement or understanding alleged in paragraphs 19 and 23 of the statement of claim.

2. An injunction restraining the defendant from making a contract or arrangement or from entering into an understanding between itself and any other farm produce agent or agents where such contract arrangement or understanding contains a provision in or to the effect of that alleged in paragraphs 19 and 23 of the statement of claim or from giving effect to any such provision.

3. An injunction restraining the defendant from making a contract or arrangement or from entering into an understariding between itself and any other farm produce agent or agents where such contract arrangement or

understanding contains a provision which has the

purpose or has or is likely to have the effect of

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fixing controlling or maintaining or providing

for the fixing controlling or maintaining of,

the price for, or a discount, allowance,

rebate or credit in relation to services

supplied or to be supplied to growers of

farm produce by the defendant or any other

farm produce agent or agents or from giving

effect to any such provision,

The defendants offered undertakings in these terms but they did not wish to argue the question of whether, in view of the continued requests for an injunction by the plaintiff, undertakings should be accepted in lieu of an injunction. The plaintiff pressed for injunctions and I think it is reasonable to grant injunctions in the agreed terms rather than to take undertakings in similar terms, having in mind the provisions of s.80(4) of the Act as amended and that when the defences were filed in April 1978 no undertaking was formally offered in the defences.

IT consider that the form of the injunctions sought, and not opposed by the defendants, except for the proffer of undertakings 1n lieu thereof, is appropriate in all the circumstances.

Consequently, I grant injunctions against each of the defendants in the terms sought and previously set out in this judgment. I further order, by consent, that the defendants pay the plaintiff's costs of these proceedings.

To return to the question of penalty, I consider

this is an appropriate case to order payment of a penalty.

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The resolution of 8 July 1975 was passed some nine months after the relevant Act came into force and the explanation which has been offered that at that time persons concerned were focusing their attention on the provisions of the

Farm Produce Agents Act, 1926 (N.S.W) should be borne in mind but it is not an adequate answer. I also bear in mind the fact that the resolution of 8 July 1975 was rescinded on 29 July 1976 and that in the letter of 14 December 1976 the President of the Chamber, on behalf of the members of the Chamber, assured the Trade Practices Commission that the Chamber would strive to ensure so far as it was able that

the activities of its members did not infringe the Trade

Practices Act. However, I feel it necessary to impose something other than a nominal penalty. The legislature has seen fit to fix a very substantial maximum penalty for a contravention of Part IV of the Act. Whilst s.76 requires the Court to have regard to a very wide range of matters in deciding whether to order that a penalty be paid to the Commonwealth, and if a penalty is to be ordered, in fixing the amount of it, nevertheless I consider that the legislature has evidenced the intention that any contravention of a provision of Part IV of the Act 1s not to be regarded lightly. No submissions have been made that there is any material before me that differing penalties should be imposed on the defendants.

In all the circumstances and considering all the matters which s.76 directs me to consider, I regard a penalty of #2500 in respect of each defendant as appropriate and I order each defendant to pay a pecuniary penalty of $2500

to the Commonwealth.

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ITcest icy thet tn-sard the ne preceding pages are a true copy cf the Reascns for Judgment herein of his Honour Mr. Justice Frank,

Pritt > Morac Ul

Associate

Dated: 23 dane 149K

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